Muscle Maker, Inc (GRIL) Q1 2023 Earnings Call

0:00 Can you hear me now? Yeah, perfect audio. You can go ahead and mute yourself, Dawn. the call to questions from analysts. At this time, good afternoon and welcome to the MuscleMaker Inc. Q1 2023 earnings call. Today's call is being recorded and all participants will be in listen-only mode. After management's prepared remarks, we will open the call to questions from analysts. At this time, for opening remarks and introductions, I would like to turn the call over to Frank Bububila, MuscleMaker Inc.' 's investor relations contact.

1:21 Thank you operator and welcome everyone to MuscleMaker Inc's first quarter 2023 earnings call and webcast. Before we get started, we would like to state that this call may include forward-looking statements pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. To the extent that the information presented on this call discusses financial projections, information or expectations about business plans, results of operations, products or markets, or otherwise made statements about future events, such statements may be forward-looking. Such forward-looking statements can be identified by the use of the words such as should, may, intends, anticipates, believes, estimates, projects, forecasts, expects, plans, and proposes.

2:10 Although management believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading Risk Factors and elsewhere in documents that Muscle Maker Inc. files from time to time with the SEC. Forward-looking statements speak only as the date of the document in which they are contained, and Muscle Maker Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. For this call, all numbers and percentages disclosed have been rounded.

2:59 On this call, we will refer to Muscle Maker Inc. as MMI. With me on the call today are MMI's Chief Executive Officer Michael Roper and Chief Financial Officer Jennifer Black. Michael and Jennifer will be presenting prepared remarks related to MMI's financials filed on May 10, 2023. And those documents may be found on MMI's website, Newswire Feeds, and on the SEC's website linked from the MMI IR pages at www.musclemakerinc.com. At this point, I would like to turn the call over to MMI's CEO, Michael Roper. Michael. Thanks, Frank. Good afternoon, everyone, and thank you for joining us today.

3:46 I'm pleased to report that Q1 was a strong continuation of Q4 and marked the first full quarter of MMI's significant pivot towards a diversified global food organization through the creation of our wholly owned subsidiary, Sadat LLC. As you may recall, in late 2022, we began a transformation from a U.S.-centric restaurant business into a global food-focused organization with two distinct business units, Sadat LLC and the MMI Restaurant Group. Our first business unit, Sadat LLC, is our newly formed international agri-commodity subsidiary specializing in the trading and shipping of food and feed commodities such as soybean meal, wheat, and corn. Today, Sadat is our largest operating unit and has been instrumental in our performance for this quarter.

4:36 This pivot into a new business and operations was done with a long-term strategic view of the opportunities in the global food supply chain. Instead of only focusing on food retail or restaurants, we broadened our view and saw that there is an increasing need for companies that can build and operate sustainable supply chains and can take part in providing food security to global communities. Along with vast financial opportunities, this creates social and environmental values and correlates with our long-term values of providing food that is healthy and fresh around the globe. Our second business unit, the MMI Restaurant Group, is our legacy business, which includes 50-plus restaurant units across two fast casual concepts, Pokemoto and Muscle Maker Grill, with Pokemoto being a high-growth restaurant brand.

5:25 The restaurant group also includes the subscription-based fresh meal prep service, Superfit Foods, with 30-plus points of distribution. So let me take a couple minutes here and discuss some of the Q1 highlights. I'm pleased to announce that MMI achieved top line revenue of $213 million for the first quarter of 2023. This revenue announcement marks the accomplishment of five consecutive months above $50 million in revenue per month for the company and demonstrates the continued performance of Sadat with a total revenue since inception in November of 2022 of over $361 million. Overall, our first quarter non-GAAP adjusted EBITDA was $2.4 million in 2023 compared to a $1.5 million non-GAAP adjusted EBITDA loss in the first quarter of 2022. The $3.9 million increase is primarily attributable to the net income generated by Sadat as we continue to execute against our new business plan.

6:29 This excludes the non-cash charges required under GAAP to account for the issuance of shares to Agya, the company providing consulting and operations support to Sadat. And I'll share more about Agya in a moment. We see Q1's results along with other strategic actions as a foundation for our future growth and diversification within the global food supply chain. In addition, we announced in the second quarter that we've instituted a share repurchase program. Regarding AGIA, as disclosed in an 8K filing on November 18th, 2022, MMI and its wholly owned subsidiary, Sadat LLC, entered into a service agreement whereby Sadat engaged AGIA to perform services related to the purchase and sale of physical food commodities.

7:14 The service agreement allows AGIA to nominate up to eight board directors, one upon signing the service agreement and an additional seven nominations upon Sadat generating specific net income targets. Two directors at $3.3 million, two more at $6.6 million, and the final three at $9.9 million. Since inception and through March 31, 2023, Sadat has generated approximately $8.7 million in net income. As Sadat crossed the second threshold of $6.6 million in net income, Agia nominated and MMI accepted two new board directors, Marvin Yao and Paul Sansom. Both of these new board directors bring industry-specific knowledge and a wealth of experience.

8:01 As of today, MMI has added five of the possible eight new AGIA-nominated board directors. We believe the agreement with AGIA to be an intelligent and creative investment in the strategic future of our company. We are confident that AGIA will continue to provide valuable insight and expertise as we grow our global food organization. We are committed to the execution of our strategic vision and to capitalize on the opportunities presented by the global food market. MMI's success this quarter is a testament to the hard work and dedication of our team, and we look forward to building on this momentum as we move forward. Now I'd like to turn the call over to our CFO, Jennifer Black, to review the financial performance of the company for the first quarter of 2023. Jennifer? Thanks, Mike, and thank you to everyone joining us here today.

8:49 Before I begin, I would like to note that our financial results for the quarter ended March 31st, 2023 on form 10Q were filed with the SEC on May 10th and in a press release that same day. With that, I'd like to give an overview of the financials for the first quarter of 2023. For the quarter ended March 31st, 2023, our company-wide revenues significantly increased in total $213 million. compared to $3 million for the prior quarter ended March 31st, 2022. Of the $213 million revenue increase, $210 million was primarily due to the commodity sales revenue generated by Sadat and its servicing agreement with Aggia. Sadat completed 19 transactions in Q1 with the average revenue per transaction of $11.1 million and an average cost of goods sold per transaction of $10.8 million.

9:45 These 19 transactions were completed throughout 11 different countries. The M&I restaurant business unit generated total revenue of $3 million. This consisted of 2.7 million from company owned and operated locations and $300,000 in royalty fees collected from both Muscle Maker Grill and Pokemoto franchise locations for the quarter ended March 31st, 2023. Company-owned and operated location revenue decreased due to the closing of underperforming and non-profitable Muscle Maker Grill restaurants, while royalty revenue increased by 36.5% as the company continues to focus its restaurant business unit strategy on franchising the Pokemoto concept.

10:31 As of today, the company has over 45 additional Pokemoto franchise agreements sold, but not yet open. The increase in franchise royalties is due to an increase in Pokemoto franchisees and a closure of one Muscle Maker Grill franchise. Overall, our first quarter non-GAAP adjusted EBITDA was $2.4 million in 2023 compared to a $1.5 million non-GAAP adjusted EBITDA loss in the first quarter of 2022. The $3.9 million increase is primarily due to the net income generated by Sadat as we continue to execute against our new business plan. Our Sadat subsidiary generated a net income of $4.3 million, while our MMI restaurant brands generated a net loss of $406,000 for the first quarter.

11:21 Adjusted EBITDA. excludes non-cash charges required under GAAP to account for the issuance of shares to Aggie and the gain related to the issuance of these shares, which we feel is an intelligent and a creative investment in the strategic future of our company. The issuance of the common shares to Aggie for the stock-based consulting agreement was the most significant change in our expense in the first quarter of 2023 compared to the same period in 2022. The stock-based consulting expense of $3.4 million for the quarter ended March 31st, 2023 is the result of common stock to be issued as consulting fee to Agya for the Sadat net income performance.

12:07 Based on the servicing agreement with Agya, the stock-based consulting fees are calculated at approximately 80% of the net income generated by the Sadat business unit. As of March 31st, 2023, we had a cash balance of 6.4 million and a working capital surplus of 6.4 million. The cash decrease in the first quarter of 2023 was due primarily to Sadat offering terms on the commodity trade transactions to generate higher margin on these trades. In addition, the company deployed capital into smaller size trades, which tend to generate higher margins. The company has over $4 million in receivables that are due in less than 60 days. With that, I'd like to turn the call back over to Michael Roper.

12:56 Thanks for the financial review, Jennifer. We're excited to report that our new diversification strategy and company pivot towards a diversified global food organization is starting to bear fruit. We firmly believe that adding our Sadat subsidiary has created significant value for the company. We are very pleased with Sadat's performance to date in our diversification strategy into the agri-commodity space. We've spoken a lot about Sadat and its impact on the overall company. Let me say a few words about our restaurant unit. As we've mentioned previously, we are focusing our strategy on growing the Pokemoto franchise business while also optimizing our other restaurant concepts, which could include closing underperforming locations or investigating other strategic alternatives. We currently have over 45 Pokemoto franchise agreements sold, but not yet open, and also have recently launched a new dual concept unit that combines our Pokemoto brand with our Muscle Maker Grill concept under the same roof.

13:49 This leverages our existing infrastructure, reducing our overall costs while offering a wide variety of options for consumers, while potentially turning a negative impact location into a positive impact location. More to come on these types of initiatives. Investors may notice that our public company brand profile and investor communications have started to shift this quarter and will continue in the current quarter to better reflect the growth story around Sadat and focus on performance from that business unit. We believe there is an ability to become more vertically integrated with the goal of generating higher contribution margins and further diversification. These are opportunities we'll explore as we move forward. It should be noted that the agri-commodity business is slightly seasonal during the U.S. winter months, so our last two quarters are a good indication of baselines for us to grow upon.

14:39 Investors may also notice a growing disparity in the operating results between the two business units. However, management is committed to focusing our resources on the path that will create the most value for shareholders moving forward. In summary, we're extremely pleased with MMI's performance this quarter, fueled by Sadat and our new diversification strategy. We're confident in our strategy and look forward to continuing growth in the months and years to come. With that, let's open the call to questions from the analysts. Thank you, Michael. We'll take our first question from Aaron Gray with Alliance Global Partners. Aaron, if you'd go ahead, please. Hi, can you guys hear me okay?

15:28 We can, yes. All right, great. Good evening, and thank you for the question. So first question for me, just nice to see the revenue, you know, four quarter of Sadat. Just on the margin side, so came in a bit lower, 2.2% versus the 3%. You know, could you offer a little bit more color in terms of maybe the reasoning for that margin coming in a bit, and also... Jennifer, I think you spoke to potentially giving some terms to help improve that margin. So further color in terms of a bad impact that it might have had would be helpful. Thanks. Okay. Hey, Aaron, it's Mike. How you doing? Good, good. So, yeah, so a couple of things that are in there. So first off, you know, why did the margin come in a little bit lighter than it did in the in the previous quarter? One thing to consider, you know, it's more than just the margins on the given trades. So the trades themselves came in, you know, within the industry standards and kind of what we expected. You know, just remember that the net income is also taking into effect. the overhead costs of MMI that are attributable, you know, directly to Sadat, right? So like, you know, increased audit fees and all that kind of stuff kind of play into this first quarter as well, as long as, as well as some of the costs that Aggie has as we build that team out, you know, so that's why you see some of the margins being a little bit slightly lower because we had some of those higher costs in those areas. And then you had something, Jennifer?

16:50 Yes, when it comes to, you know, the ways to increase margins, it's, we're now offering a terms to some of our buyers where we may do it where the profit is extended 60 to 90 day terms, just to give us, you know, any additional edge we can have on margins. Okay. Yeah. Just to follow up on that quickly. If I'm just thinking about just straight margin, just off of Sadat revenue and commodity expenses. So would that have been, you're saying that would have also included some, some corporate expense within that? So if you look at the commodity operating expenses, there's labor in there and then there's other what's called other commodity operating expenses. Those are to pay the traders, to pay the office expense, you know, general operational expenses to get those trades done is in that line.

17:40 OK, thanks for that. And then on the. the working capital needs kind of going forward, right? So it sounds like these terms you're offering kind of change up from what we had seen in 4Q with the business. So how do you think about, you know, working capital needs as you potentially offer more terms to your customers? Yeah, look, I always view all this as really a cash flow scenario, right? And so, you know, one way to look at it is, you know, we've got plenty of cash on hand to take care of all of our operational needs here for the short term. And then we also have, you know, as we indicated, you know, a little over $4 million coming in here in the next, well, it was 60 days, a little bit less than that now, right? You know, as each day moves on. So, You know, we started receiving some of that capital today, as a matter of fact, right, as some of those deposits.

18:26 So we're not really too concerned about needing some of that to execute our business plan at this stage. Okay, great. Thanks. That's helpful. On the top line, you mentioned you know, some seasonality in the winter months. So, you know, offer some further color if you could in terms of what to expect now going into the summer. So it sounds like that'll be a benefit. And then if you could provide some more color just in terms of, you know, the clientele, you know, how diversified you are and how you might be looking to increase that diversability, I think that'd be helpful to get better color on this business. Thanks. Okay. Yep. So a couple of things in there and I'll let Jennifer talk about some of the clientele and the products and things with some stats in there. But when you start thinking about the revenue, you know, just in general, there is a seasonality component to this. Right. And that's really, you know, where your clientele is and the commodities you're trading, whether you're in the northern hemisphere, the southern hemisphere, all kinds of different factors of that play in there.

19:21 In the beginning of the year, you also have, which has affected us at the beginning of this quarter, you also have like New Year's, right? That in different parts of the world is, you know, extends a lot longer than it is just here in the United States. And so all that kind of plays into the seasonality role that's there. One thing to kind of look at and, you know, that I like to really kind of view this as is we've had five consecutive months now since really since inception. that we've had 50 plus million dollars in revenue and some months going as high as 90 million. Right. And so we think that's a pretty good range to think about as we move forward, you know, as kind of our maintain area, if you want to say. Right. But look, we're trying to expand this, obviously. Right. And expand the revenue. And some of the ways to do that is through diversifying our operations. And we can do that by adding and I like to call it horizontal revenue.

20:06 You know, integration, you can do that by adding additional trade lines or traders, you know, different, you know, clientele that they have across different countries and product types. And so you can start to, you know, level out, if you want to say, these seasonality factors as you move forward, you know, as you increase the different commodities in different areas in the world that you're trading with and working on. So, you know, really, it's kind of like if I went and started trading in both hemispheres, I'd be able to reduce some of that seasonality. You know, if we expanded our commodities into things like, you know, pulses and peas or, you know, different commodities that we aren't trading today, you can start, you know, leveling out that fluctuation, I guess, is one way to view it. Do you want to talk about the... Yeah, absolutely. So if you take... We'll take quarter one, for example.

20:52 We completed 19 different trade transactions. And of those transactions, that consisted of nine different products from four different suppliers. And we sold those to 15 different buyers throughout 11 countries. Do that matrix. That's a long math. Sorry. But because of that, you know, as we are able to expand and we're able to use different buyers, different products, you know, different suppliers and more countries, then that seasonality or that focus, it just expands and it gives you more, you know, a little bit more leverage on that. And, you know, in this last quarter, we also shipped multiple types of grains, both human and for animal consumption. The majority focused on wheat, corn, soybeans. We other did some palm oils and rice. And so, you know, we only had a few different areas that we focused on on Q1. And so as we expand on that, the seasonality will decrease.

21:44 And I do think it's important to mention that the Agia team that we're working with, they've got a huge level of experience and a wealth of knowledge that they're bringing to this equation. And that's allowed us to get over the hump of some of these initial challenges start up inefficiencies, if you want to say, and allowed us to hit the ground running and running pretty hard. And so it's really good that we've got that experience that's out there and the know-how. And it also allows us to grow, right? They've got more experience in different commodity areas, for example. They got more experience in some of the vertical integration stuff of farming and shipping and all the other things in between, right? So as we expand this business and bring on these other revenue sources, you know, they'll be able to expand right with us without having to have some of those inefficiencies when you start up these businesses. We are going to be bringing in some additional, I'll just say personnel. You know, really it's more like traders and those traders come with their own clientele and their own sources, you know, of product.

22:39 And so it's kind of like bringing their, I'm going to use an old fashioned term, their Rolodex, right? I don't know if everybody even knows what that is on the call. right but they bring their their list of contacts their linkedin file i guess now right um you know and and so you know you're able to start expanding your commodity trades and all that we're taking a look at some of these additional capabilities you know specifically in like north america will probably be the next area that we start to pull stuff in so hope that answers your question aaron no that's helpful appreciate the detail and i'll go ahead and jump back at the queue Thanks, Aaron. Thanks, Michael. Thanks, Jennifer. We're going to take the next question from Tom Kerr with Zach's Research. Tom, if you want to ask questions. Sounds good. Can you guys hear me? We can. Yes. Thank you. All right. Just one quick follow up on the Sadat business and have a few Pokemon, but I just wanted to beat the dead horse again on the revenue line.

23:30 You said that the 90 million is a monthly base. that you're trying to achieve, but there's still lumpiness? So does that mean the 270 million a quarter, but it might be 200 million one quarter, it might be 350, but you're sticking to 90 million as an average monthly base, if I heard that right? Well, we don't like to really provide guidance on that per se, but just in the general discussions, I think it's safe to say that You know, we've achieved at least 50 million per month, right, since inception. And we've had a couple months as high as a little over the 90s, right? And so I know that's a pretty wide range, you know, and it can fluctuate like that depending on the quarter and the season that you're in. But somewhere in that range is what we're expecting to have as, you know, as a base. And then we'll start growing off of that by adding all these different, you know, verticals into the equation.

24:20 Okay, let's just follow up on that. So there's not an extreme lumpiness. There might be a little bit up and down, but it's not where you'd see. 210 last quarter, 150 next quarter, 350 the third quarter. or anything like that. I'm not sure I have enough experience in it, you know, in history, since we started this to really dictate how it looks for the rest of the year. But, you know, I think it's pretty safe to say you'll be in that, that range, right. You know, the, the, you know, and yes, it will be a little bit lumpy depending on the season, but, um, you know, we'll kind of watch that out as we kind of move forward. All right. That helps a little bit, um, quickly on the Pokemon. There's 45 that are, uh, expected to be open. Do you have a timeframe on that? It's the first part question. How many will be open and operating by the end of the year?

25:07 Or could you do that even by quarter? And then second part of that is any headwinds that in these openings, is inflation a problem, labor, real estate, anything like that that might slow down these openings? Okay, yeah, let me kind of go into that a little bit. So, Pokemoto, you know, is part of our restaurant division. As you guys know, we have, you know, Muscle Maker Grill restaurants, Pokemoto restaurants, and Superfit Foods. Pokemoto is what we're focusing on. That's all of our strategy and our growth on the restaurant side of the equation. As you mentioned, we've got right now today, we have roughly, it's actually a little bit more than 45 locations or agreements that have been sold worldwide. but haven't been opened yet. As a matter of fact, we just sold four more locations here in the last couple of weeks. We sold a three pack in Houston about a week ago, which adds to that market. And then we also sold our first franchise agreement out of Alabama in Mobile, I think it was. that we sold as well.

26:04 So we're expanding into more states there. So a lot of growth that's happening in Pokemoto. There are fluctuations from when you sell a location to when it actually opens. And that is totally strictly dependent upon the individual franchisee and the real estate availability in their market. Some franchisees will already have a location lined up. They've already negotiated the lease. They're ready to go. So when they sign the franchise agreement, they're off and running and you can open that in two to four months, right? You get them through their training and ordering their equipment and they build out and they're up and running, right? Other franchisees will wait to start looking for real estate until they sign the agreement. And obviously that will take a little bit longer. In those instances, on average, it's somewhere between six and nine months before they open. Could be sooner, could be later. Again, it all depends on the negotiations with landlords and availability of space that's there.

26:54 For 2023, We are projecting, based on what we know of franchisees who have locations or are close to having locations, we're projecting to open up between now and the end of the year, somewhere between 15 and 20 locations between now and the end of the year. We're pretty confident in those numbers. Could grow, depending on how some of these landlords come in. Now, you're also signing up franchisees along the way. So as those are opening, you're also going to refill in your pipeline. Right. And so we'll continue to have a pipeline for openings as we move forward on this. And again, if somebody signs like the three pack in Houston, they're not going to open all three at the same time. You know, they'll open them. They'll stagger them over a couple of years. Right. um or or even you know sooner than that if they're comfortable but you know usually it's over a couple years for that that amount of stores so you do have that that's in there now you asked about inflation and all that kind of stuff and headwinds it's interesting my experience in um franchising is you'll sell franchises when the economy's great right because people will be like okay i'll buy a franchise i can invest in a business but you won't sell as many As you will when the economy glitches. And that sounds weird.

28:07 Okay, but when layoffs start in the economy, a lot of times people look to how do I create a job I just got laid off somewhere, you know, there's not a lot of hiring going on. I'm worried about what I'm going to do. And they get angry. I'm never going to work for someone again. I'm going to do all this. And so a lot of times it actually starts shifting into franchise sales. I know that sounds a little bit opposite of what you would think, but that's been my experience in the past. We're starting to see that a little bit now. Okay. As the economy glitches, our leads are still coming in, but as layoffs are starting to occur, We are starting to see, you know, some acceleration in franchise signings over the last, you know, 30 to 45 days. That might be a glitch, a one-off. I don't know, but that's been kind of my experience as you move forward. You do have some concern out there from franchisees in general.

28:52 As the interest rates go up, a lot of these guys will finance the build-out, right? And so as interest rate goes up, then obviously, you know, inflation, affects their their costs right to build to build out a location so that does become a little bit you know problematic as interest rates get too high so you're always you know going across this now i think you did you also ask me tom about just in general how like inflation and food costs and all that is basing on it or am i reading into that too much Well, that's just the general input into whether it's affecting these openings that have already been signed or is it just all part of the plan? Yeah, I don't think it's really. I mean, like I said, we've already got the 15 to 20 that we got pretty much on the books. We're really confident in those. Those are people that have either, you know, most of them have already got their funding.

29:37 They're already in some kind of a process with opening up. construction or finalizing off their negotiations with the landlord. So we're pretty confident in those, you know, for coming across. And so we haven't seen really anything slowing that down per se, but again, you know, if interest rates go through the roof or whatever, then that could be a problem, but not anticipating that happening right now. Great. That was helpful. I'll get back to McHugh. Thank you, Tom. Thanks, Mike. We'll go ahead and take the next question from Rob Goldman with Goldman Small Cap Research. Hello, can you hear me? Yes, we can. Great, thank you. Great job on the quarter. A couple of questions on Sadat and one on MMI. With respect to Sadat during the quarter, was there any notable concentration of business in specific food or commodity or geography?

30:29 I know Jennifer went through some of those numbers, but I didn't know if there was a heavy concentration in one particular segment there. So when you actually look at that, you know, like I said, we were in 11 different countries and stuff like that. It wasn't, there wasn't two countries where all of it went to. It was pretty evenly spread amongst the different countries that we worked in. Same with the suppliers and the buyers. There weren't just, it wasn't one buyer or one supplier that made up the bulk of it. It was pretty spread evenly between those. Okay. So perhaps then given this, albeit short experience, the ability to reduce some of the variability in revenue might be then some of these initiatives that Michael mentioned earlier on whether it be the product side or geography I guess kind of making that flat so to speak what would be a combination of both or are you leaning more toward growth in a product line first and geography second or is it just too early?

31:37 to give us that information? I think it's actually going to be a combination, you know, looking to expand, you know, when you expand the traders and you add traders, those are adding different commodities, different areas, you know, different countries, it's adding all of it. And so when picking up new products that we are buying and selling and going into new geographical areas, I think that combined will actually level it out. Does that answer your question? Yes. And then on the, uh, the legacy business. What type of metrics does Grill plan to use for some of the combination Musclemaker Grill, Musclemaker Grill, Pokemoto locations to be considered a success? And is there a number that you have in mind that you plan to open this year and next year?

32:25 Let me jump in here. I guess the way I look at these dual concepts, and just so everyone's on the same page, what this means is we take an existing Muscle Maker Grill restaurant. We just did this in Fort Sill in Lawton, Oklahoma. It was a Muscle Maker Grill restaurant. Then we add a Pokemoto to it, right? So it's two restaurants running under the same roof. You get to leverage the same manager. You get to leverage the same, you know, facilities like freezers and coolers and all that kind of stuff. So, you know, you get, and you get, you know, not a lot of the product per se, a little bit, but you get to leverage those types of things, right? Which, which, you know, gives you better efficiencies and helps reduce your costs. So, you know, the first thing that we did, we had, we just launched this first one about 30 to 45 days ago.

33:11 And the numbers we're seeing are very impressive so far. I mean, we literally are at this stage probably, you know, three to four times the revenue at the Pokemoto than we had at the Musclemaker, right, which is significant. So, you know, we're looking at revenue. We are looking at overall blended food costs. Really, it's trying to take, you know, locations that are underperforming. and get them to be performing, you know, for lack of better definition, right? So that's our first measurement, right? To get these things at least to break even and then start making money afterwards. And so again, only being 45 days into it, we don't have a whole lot of, you know, data behind it yet, but so far it looks pretty encouraging from that. So we'll be looking at the standard. you know, revenue and food costs and labor costs and, you know, on the bottom line on these. Then from, you also asked about how many we're thinking of doing here.

33:59 So, you know, we have our second one opening up here soon, if not this week, then next week. We're just literally waiting for our final inspection, basically, and it shifts around a little bit, but in Chelsea, New York, right? So we'll have that in the Chelsea area for anybody that might be up there And then we've got a couple other ones that we're contemplating on a couple of the military bases that we have locations. And so that'll be kind of how we start addressing the legacy business. As we mentioned earlier, we're looking at each one of the different locations. We're trying to figure out, you know, if there's underperforming locations, can we close it or what can we do to make it performing? And this is one of those ways of looking at it. So we're aggressively trying to analyze some of that legacy business. Yeah, great. Thank you.

34:48 Perfect. Thank you, Rob. I guess we'll go ahead and move on to Mr. William Gregozeski. Hopefully I pronounced that right. Mr. William, we'll take your questions now. And you are with Green Ridge Global, I see. Do you have any questions for us? Yeah. Just on the front business. What is the plan, I guess, near term and then after Agya effectively takes control of the board of that restaurant business in general? You mentioned strategic alternatives, but is that something where you might sell all of them off or part of it or divest in some way? What is their kind of plan for that business? Yeah, so I was having a little bit of trouble hearing you, but I think I got it.

35:34 You're asking about what is the plan for the restaurant business moving forward just in general. So, excuse me. Sorry. So the way to look at it, again, there's three segments that are in there. You've got Muscle Maker Grill, you've got Superfit Foods, and you have Pokemoto. Pokemoto is what we're focusing on. Our strategy there is to grow Pokemoto through franchising. And I keep mentioning franchising over and over again because we are taking a look at our legacy business when it comes to corporately owned and operated locations. In a lot of those instances, those are underperforming. And some of them are old locations that have been around for a long time. And so we're taking a look at those to see whether or not we should close them.

36:19 Or if not, if the leases don't allow us to do that or it just doesn't make sense, because that is an issue to consider, then we look at making it a dual location or even in some cases a complete conversion. So we're going through that from the muscle maker grill locations, one at a time, trying to figure out how we can optimize those. Now we do talk about strategic, you know, alternatives or initiatives that are out there and, you know, look, we can take a look at, that's really more of a longer term thing. Is there a way for us to, you know, eventually if the business warrants it to spin off the restaurants or a portion of the restaurants, again, we're still looking at all that stuff, but our immediate fix now is to, you know, sit there and try to get these locations profitable and, or if we can't to close them down and cut some costs from that perspective.

37:05 So you're ever taking a look to, you know, cut costs in that area, that side of the business allows us to focus and, you know, just on the moto itself and then also the Sadat business. Okay. And then on the, The cash that's being generated now from Sadat, what is the plan for that cash? Do you guys foresee any need to go back to the markets to raise more money? Yeah, so right now we're not going back to the markets to raise money. We don't need that today. We're able to execute our business plan. The cash that's being generated out of Sadat, what we're really doing is taking a look at it from a strategic perspective. That money is going to get reinvested in Sadat in one capacity or another. So we've got a share buyback program that we announced, so some of the cash can go towards that. We do want to be hiring in some additional trade personnel.

37:54 As we mentioned earlier, that's kind of the horizontal scenario. integration of the business, right? As we add more of those trade personnel, they bring in their clients or their Rolodex, whatever it might be, you know, for that to come in. So, you know, we take a look at that as well. We're also using some of that money, you know, that cash in there, you know, to give additional terms, you know, to give us up a little bit of leeway so we can offer terms to our customers to kind of build our margin. And we're usually, you know, using the cash that way to reinvest in Sadat. Yeah, now when I do say we're not going back to raise capital or whatever, we are opportunistic, right? So as we look at the vertical integration stuff that's out there and some opportunities, that could require us to maybe take on some debt or something like that to acquire some of these things. But again, we're analyzing all that stuff as we speak.

38:44 And it's a little bit early for us to talk through more than just that at this stage. Okay, and last question is, you mentioned adding the traders or Sadat. what how much you know how many traders do they have now and then how many you know are you looking to add just to get a sense of how fast the revenue might grow yeah well i think a good way of looking at it is you know how many people are in agia because a lot of these guys aren't just pure traders right um they do other you know facets of the business as well and we have roughly 20 people yeah in the agia consulting team they consist of you know traders operational And is there any like number you're looking to add on that?

39:32 You know, I don't think I have an exact number because again, I'm oversimplifying, but by saying add the trader. So it's more than just one person. Sometimes you're, you know, making a partnership or an agreement with a trading company, you know, or whatever to do stuff. So it's a little bit of a gray area to answer, I guess, right directly. So it's not one-to-one, but it's really more of looking at the different businesses that are out there to do it. Okay. All right. Thank you. Thank you, William. And I think we have run out of time today. That's all the time we have. Let's go ahead and wrap up the Q&A. Thank you everyone for your questions. Mr. Roper, do you have any final comments?

40:19 Yeah, look, just in closing, I do want to thank all of our shareholders and stakeholders for their support and supporting our initiatives that are out there. I know we've done a major pivot and there could be a lot of questions that are there and we're doing our best to get the narrative out there of exactly what. you know, kind of what we're doing. And we do feel that, you know, the message, you know, is getting better and people understanding kind of what's happening here on things. So, you know, I do appreciate the patience and I do want to thank our employees for everything they do. I do think we got an incredible team, not only at MMI, but also at, at Agia who are working with us, you know, we're working really well together and, you know, between the two, they're really, you know, who deserve all the credit for our success so, so far. And I'm just part of, you know, being part of what we built, you know, and we're going to continue to build here and move forward. So yeah, You know, with that, I'd just like to thank everybody.

41:05 And, you know, one last final thing. Go Blackhawks. They got first in the draft and get to get Conor Bedard. Wonderful. Thank you all for joining. We'll go ahead and conclude the call. Thank you.